Two Giants Swap Ambitions

By ANDREW POLLACK

Published: July 24, 1987

Correction Appended

In its huge trade of businesses with Thomson S.A. of France, the General Electric Company seems to be getting the better end of the deal. On the surface, it appears to be exchanging its low-growth, low-margin consumer electronics business for a bigger piece of a much more alluring high-technology business: medical imaging.

But the medical imaging business has not been that spectacular an industry either. While some pockets of it have shown rapid growth, the overall business has been growing slowly, according to some industry and analyst estimates, and profit margins have generally been slim.

Indeed, G.E.'s acquisition of the Thomson business is just the latest in a series of consolidations in the industry, which is settling into one dominated by a few giant companies.

Earlier this year, the Dutch giant Philips N.V. said it would combine its medical imaging business with that of the Picker division of the General Electric Company of Britain (no relation to the American company). Last year, Johnson & Johnson abandoned its medical imaging business, selling pieces to its main American rival, General Electric.

Others, such as Diasonics Inc. and ADAC Laboratories, two small companies in California's Silicon Valley, have suffered heavy losses in recent years, though Diasonics has returned to profitability.

''There's excess capacity; profitability has been tough.'' said Lawrence Haimovitch, medical technology analyst with Swergold, Chefitz & Sinsabaugh, a New York investment firm.

Still, analysts said the G.E.-Thomson transaction, announced Wednesday, makes plenty of sense for G.E. by giving it a much stronger presence in Europe. G.E., which expects its own sales of medical imaging equipment to total $1.6 billion this year, has done better than most and said thatthat its profits, which it declined to disclose, have risen 15 percent annually in the last five years. A $6 Billion Business

Thomson's diagnostic imaging business has sales of about $700 million. Its medical imaging business has not been very profitable, and there have been reports that the company has tried to sell it in the past.

Medical imaging involves using sophisticated machines to examine the body in an effort to diagnose illnesses. The technologies range from the common X-ray machine to multimillion-dollar magnetic resonance imagers.

Philip G. Drew, a consultant in Chelmsford, Mass., estimates that worldwide sales of diagnostic-imaging equipment now total $6 billion a year, and are growing at only 1 to 2 percent annually. But G.E., which puts the size of the market at $8 billion, is more optimistic. While G.E. thinks sales in the United States, which accounts for half of the world market, are growing 2 percent annually, it believes sales outside the United States are expanding at a 6 to 8 percent rate.

As a result of the consolidations, G.E. said that it, Siemens A.G. of West Germany and the Philips-Picker joint venture would each have a world market share of between 20 and 25 percent. The Toshiba Corporation of Japan is also a major player in the market, and it has started to cooperate in limited ways with Diasonics. Changing Government Rules

One factor behind the industry shake-out has been new Government rules for reimbursing hospitals for medical treatment. When the new cost-containment system was put into effect a few years ago, spending on expensive medical equipment, such as diagnostic imagers, slowed dramatically.

Even G.E. has not been immune to profit pressures. It has had layoffs at its Milwaukee medical equipment division. And only last week the company announced it would close a plant near Sacramento, Calif., that makes ultrasound equipment and consolidate those operations in Milwaukee.

The big benefit to G.E. of its deal with Thomson is that G.E. will triple its market share in Europe to about 20 percent. While G.E. has long dominated the American market for medical imaging equipment, it has been weaker in other parts of the world, where the market is growing faster.

Thomson has extremely strong products for mammography, which involves specialized X-ray systems to examine breasts. Other than that, however, products of the two companies overlap. ''It's more a fit geographically,'' said Roger Lindahl, executive editor of Diagnostic Imaging Scan, a San Francisco newsletter. G.E. 'Swept the Market Away'

There are five major technologies involved in diagnostic imaging and G.E. is a major player in all of them. However, it made its biggest success is computer tomography, often called CAT or CT scanning, which involves using X-rays and computers to create cross-sectional images of organs. ''They really swept the market away, at least in the U.S.'' said Mr. Drew, the consultant.

Now, however, the CT scanning market is stagnant. G.E. however, seems to be duplicating its success in magnetic resonance imaging. This new and fast-growing segment involves placing the patient in a powerful magnetic field and exposing him to radio waves. Atoms in the body respond by emitting faint radio signals, which are detected and analyzed.

G.E. is not quite as dominant in the other fast-growing segment, ultrasound, which uses high-frequency sound waves and is used to examine fetuses in pregnant women. Such companies as the Acuson Corporation, a young California concern, Diasonics and the Hewlett-Packard Company are strong in that area. THE MARKETPLACE FOR MEDICAL IMAGING EQUIPMENT *2*Annual Growth Equipment Cost Market Size 81-86 86-91* Major Competitors CT Scanning $200,000 to $450 million 21% -4% General Electric $1 million and Siemens, Pickerd Ultrasound $25,000 to $320 million 13% 11% Acuson, Diasonics, $200,000 American Technology Laboratories (Squibb subsidiary), Hewlett -Packard, Toshiba, General Electric and others Nuclear Imaging $65,000 to $180 million 5% 3% Siemens, General $125,000 Electric, Pickerd and ADAC Laboratories X-Ray $10,000 to $890 million 6% 2% Siemens, General $250,000 Electric, Philips, Pickerd and others Magnetic Resonance $1 million to $100 million n.m. 50% Diasonics, Philips, Imaging $1.8 million Pickerd, General Electric, Siemens and Toshiba * Forecast n.m. - Not meaningful d A Cleveland-based subsidiary of Britain's General Electric Company, Picker is now in a joint venture with Philips. Source: Morgan Stanley

Photo of subject about to undego brain scan with General Electric CT scanning device (NYT/UPI)